LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
'Capacity' to contract for life insurance is lacking in:
- AAnyone under 30, since the Act sets a minimum age for owning a policy on one's own life
- BMarried persons, who require the consent of their spouse before contracting for insurance
- CNon-residents, who cannot contract with a Canadian insurer under the Insurance Act without a provincial residency certificate
- Minors, subject to statutory exceptions, persons of unsound mind, and those under undue influence
Correct answer: D) Minors, subject to statutory exceptions, persons of unsound mind, and those under undue influence
Capacity rules determine whether a contract can be enforced. Insurance Acts allow minors of 16 (varies) to insure their own lives in some provinces.
Why the other options are wrong
- AAdults have capacity.
- BMarital status does not affect capacity.
- CResidency affects other things, not capacity.
Exam tip
Capacity: minors (with exceptions), mental incapacity, undue influence.
Common mistake
Taking an application from a client who clearly lacks capacity.
What this tests
CISRO competency component 1.3 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.